Price-Cutting Trends in New Drugs after Listing in South Korea: The Effect of the Reimbursement Review Pathway on Price Reduction

Abstract

This study aims to analyze the trends of post-listing price changes for new drugs listed from 2007, when the health technology assessment (HTA) was introduced in South Korea, until 2017. We analyzed 135 products that have undergone price cuts. These products were analyzed by their respective review pathways, namely, pharmaco-economic study (PE), weighted average price (WAP), and the without a cost-effectiveness (CE) pathway. Prices were discounted faster in PE than in WAP (p = 0.002 in a comparison between PE and WAP). In addition, the median discount rate of the first price cut was 5.0% (range: 0.1–20.0) for PE, 3.0% (range: <0.1–30.0) for WAP, and 5.0% (range: 0.6–10.9) without a CE pathway. The median cumulative discount rate of PE and WAP showed that the PE pathway products’ discount rates were higher: 10.4% for PE and 6.0% for WAP (p = 0.025 for comparison between PE and WAP). It is necessary to discuss the practical effects of the price-cutting system from a myriad of perspectives, including insurance finance, the value of new drugs, and the accessibility of new drugs to patients.

Pricing and Reimbursement Pathways of New Orphan Drugs in South Korea: A Longitudinal Comparison

“…In particular, the listing price of new drugs cannot exceed the prices in other countries or the AAP. After these drugs are listed, their prices can be reduced through various mechanisms [ 24 ]. Consequently, price-related issues, such as the appropriateness of the listing price and post-listing price cuts, are constantly raised in South Korea.…”

“…When the sales volume of a drug increases by 30% or more than the contracted annual volume, the listing price of the drug can decrease by a maximum of 10% through a negotiation between a pharmaceutical company and the NHIS. Under a price–volume agreement (PVA), the benefits for the price of the OD are not applied [ 24 , 25 ].…”

“…In the case of non-ODs, when a generic drug is listed, the price of both the original and generic drugs decreases by 53.55% or less. When a generic OD is listed, the price of the original OD is maintained, and the generic OD can be listed at the same price as the original OD [ 24 , 25 ].…”

“…When the indication and reimbursement scope of a listed drug is expanded, its price should be reduced in accordance with the budget impact associated with its wider usage. On the contrary, the price of an OD is not reduced when its scope expands [ 24 , 25 ].…”

“…However, ODs are excluded from such a price reduction. Moreover, the government lowers the price of a listed drug via price re-evaluations that compare its price as determined by other countries, as well as its clinical effectiveness, but ODs are excluded from such drug price re-evaluations [ 24 , 25 ].…”